Traditional Medicinals Sustainability and Benefit ...

Traditional Medicinals

Sustainability and Benefit Corporation Annual Report FY 2014

(October 1, 2013 ? September 30, 2014)

Contents Authors of the Report and Data Collection Process............................................................................................................................................................iii Company Background Information ...........................................................................................................................................................................................iii Our Approach to Public Reporting .......................................................................................................................................................................................... viii SFTA Annual Reporting Commitment ...................................................................................................................................................................................... ix California Benefit Corporation Reporting Commitment ..................................................................................................................................................ix B-Lab Third Party Certification .................................................................................................................................................................................................... x 1. ORGANIC AND FAIR (SUSTAINABLE) LAND USE & ETHICAL SOURCING PRACTICES ............................................................................1

1.1. Biodiversity Conservation, Forests and Native Ecosystems ......................................................................................................................1 1.2. Ethical and Fair Trade Sourcing ............................................................................................................................................................................. 4 1.3. Geo-Authentic Botanicals .......................................................................................................................................................................................... 7 1.4. Non-GMO Verification ................................................................................................................................................................................................. 8 1.5. Organic Sourcing and Handling ........................................................................................................................................................................... 10 2. DISTRIBUTION & SOURCING ........................................................................................................................................................................................... 14 3. ENERGY USE............................................................................................................................................................................................................................ 18 4. CLIMATE CHANGE AND AIR EMISSIONS.................................................................................................................................................................... 23 5. WATER USE AND QUALITY .............................................................................................................................................................................................. 30 6. SOLID WASTE REDUCTION .............................................................................................................................................................................................. 33 7. PACKAGING, MARKETING AND OTHER MATERIALS........................................................................................................................................... 37 7.1. Packaging Materials .................................................................................................................................................................................................. 37 7.2. Marketing Materials .................................................................................................................................................................................................. 39 7.3. Other Materials............................................................................................................................................................................................................ 39 8. LABOR ........................................................................................................................................................................................................................................ 42 9. ANIMAL CARE......................................................................................................................................................................................................................... 46 10. SUSTAINABILITY EDUCATION (Internal and External)................................................................................................................................. 48 11. GOVERNANCE AND COMMUNITY ENGAGEMENT............................................................................................................................................ 52 11.1. Sustainability Governance ................................................................................................................................................................................ 53 11.2. Transparency & Stakeholder Engagement .......................................................................................................................................................... 54 11.3. Membership and Volunteerism in Associations and Advocacy Organizations.................................................................................... 55 11.4. Community Engagement.............................................................................................................................................................................................. 56 11.5. Third Party Certifications and Recognitions....................................................................................................................................................... 58

Certified California Green Business................................................................................................................................................................................. 58 Certified B Corporation ........................................................................................................................................................................................................ 59 Green America? Gold Tier Certified Business............................................................................................................................................................ 59 2014 Bay Area Green Business Award ........................................................................................................................................................................... 60 U.S. EPA Green Power Partner.......................................................................................................................................................................................... 61

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Authors of the Report and Data Collection Process

Contact information: Josef Brinckmann, VP of Sustainability (707) 824-6759 / jbrinckmann@ Ben Couch, Supply Chain and Sustainability Project Manager (707) 824-6784 / bcouch@

Information for this SFTA report was collected from the responsible persons of various departments of the company in particular the Senior Accounting Manager, Chief Financial Officer, Human Resources Manager, Procurement Manager, Site Development Manager, Supply Chain and Sustainability Project Manager, VP of Human Resources, and VP of Sustainability. The stated goals for Fiscal Year (FY) 2015 were developed collaboratively by Traditional Medicinals' Executive Leadership Team (ELT) during two half-day workshops carried out in summer of 2014 facilitated by the VP of Sustainability. Members of the ELT are identified here below.

Company Background Information

Founded in 1974, Traditional Medicinals? is a family owned business, producing certified organic and nonGMO verified herbal medicinal teas in its solar powered facility with Fair Trade and FairWild? certified herbs. The company is a California Benefit Corporation, a Certified B Corporation, a California Certified Green Business, Green America? GOLD certified Green Business, and a long-standing member of the California Certified Organic Famers. The company's products are distributed mainly in the United States of America and Canada through health and natural foods stores, cooperative grocers, independent grocers, major grocery chains, mass market retailers, and drug stores.

Mission Statement:

Traditional Medicinals? makes affordable and effective herbal medicines for family healthcare. We honor traditional herbal knowledge and modern phytotherapy. We balance our commitment to sustainability with our commitment to the highest quality ingredients, and promote social justice and environmental activism.

Vision Statement:

Traditional Medicinals? inspires people to embrace plant medicine and empowers them to care for themselves and others. We aspire to transform the commerce of herbs by promoting wellbeing at every point and striving to create value for all stakeholders, from collection and cultivation to consumption.

Board of Directors:

Drake Sadler, Chairman John Elstrott Susan Shields

Blair Kellison Mark Retzloff Michael Funk

Executive Leadership Team (ELT):

Blair Kellison: Chief Executive Officer Janine Levijarvi: VP of Human Resources Scott Nakashian: VP of Operations Gary Gatton: VP of Sales

Jane Catelani Howard: Chief Financial Officer Katie Huggins: VP of Technical Services Matt Crum: VP of Marketing

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Traditional Medicinals? Inc. Headquarters, Sebastopol, California. Photo courtesy: ?2014 Julie Hughes

Locations and Facilities:

Headquarters and Manufacturing Facility: 4515 Ross Road, Sebastopol, California 95472 Marketing and Sales Services Offices: 621 Second Street, Suite A, Petaluma, California 94952 Storage Warehouse: 975 Corporate Center Parkway, Suite 140 B, Santa Rosa, California 95407

Web Sites:

Traditional Medicinals (USA): Traditional Medicinals (CANADA): Facebook: Instagram: Pinterest: Twitter:

Memberships and Sponsorships:

Traditional Medicinals is a corporate member of the United Plant Savers (UpS), an emerald sponsor member of the American Botanical Council (ABC), a founding member of the American Herbal Products Association (AHPA), a friend of the Fair Wild Foundation (FWF), a gold leaf sponsor of the American Herbalists Guild (AHG), a member of the California Certified Organic Farmers (CCOF), a member of Green America? Green Business NetworkTM, a member of the Organic Trade Association (OTA), a platinum member of the American Herbal Pharmacopoeia (AHP), and sponsor member of the Sustainable Food Trade Association (SFTA).

Primary Regions for Sales:

Our organic herbal products are sold mainly the United States of America and Canada but there is also some distribution in Japan, Hong Kong Special Administrative Region of the People's Republic of China, Republic of China (Taiwan), Republic of Singapore, and the Republic of the Philippines.

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Primary Regions for Sourcing:

For our approximately 60 herbal products we use over 100 different botanical ingredients that are sourced from over 35 countries. Most of our formulations stem from European herbal traditions. Therefore we mainly use European and Mediterranean as well as some Western Asian plant species in our herbal products. Important partners for the supply of the botanical ingredients that we use in our herbal products include wild collection firms, family farms and processing companies situated in European countries, especially Bosnia & Herzegovina, Federal Republic of Germany, Hungary, Italian Republic, Republic of Albania, Republic of Austria, Republic of Bulgaria, and Republic of Poland.

However in terms of the annual volume of botanical raw materials sourced, about 80% originate from ten countries (of five continents) in the following order,

(1) Republic of India (2) Arab Republic of Egypt (3) United States of America (4) Republic of Bulgaria (5) Republic of Kazakhstan (6) Republic of Poland (7) Hungary (8) Democratic Socialist Republic of Sri Lanka (9) Bosnia & Herzegovina (10) Republic of Paraguay

(Asia) (Africa) (North America) (Europe) (Asia) (Europe) (Europe) (Asia) (Europe) (South America).

Furthermore, over 50% of the total volume of botanicals used by the company originates from the top four listed countries (India, Egypt, USA, and Bulgaria).

Main source countries for botanical raw materials used by Traditional Medicinals in terms of volume. The legend in above map shows quantitative ranges of pounds purchased from lightest color (none purchased)

to darkest color (highest volume).

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A letter from our CEO, Blair Kellison Together, our 150 employees are the stewards of Traditional Medicinals. Since our inception in 1974 we have spent 40 years infusing environmental and social sustainability into our operations. It is an honor for me to represent our employees in this opening address of our 2014 Annual Sustainability Report. For 40 years we've been a company that has strived to do the right thing. In all our actions we have considered their effects on all stakeholders, not just our shareholders, and we've always tried to make our actions transparent to others. Thankfully, the California Benefit Corporation regulation has established clear guidelines for public reporting of just what doing the right thing means each year for each company. We initiated this annual report to enhance our company's transparency with our stakeholders and in particular our consumers. From our early beginnings we have been deeply committed to environmental and social sustainability so we welcomed the opportunity to illustrate this commitment in our annual sustainability report. We hope that the readers of this, our third annual sustainability report, will find the information as beneficial as we have internally. The rigor of preparing this report each year brings to light areas where we can do a better job of "doing the right thing". This report renews annually, across all departments, our commitment to look deeper inside ourselves to find ways to improve. We never find ourselves celebrating the improvement of our `B Score' or comparing ourselves to others but instead focusing on the areas we can improve upon. The SFTA and California Benefit Corporation reporting processes identify specific areas where we can still make improvements and make public our intentions to do so. At Traditional Medicinals we believe the actions we take today around sustainability will one day simply be the norm or the law and that we are just a little ahead of our time. We thank the readers of this report for taking the time to take a look at how we are doing. We welcome your feedback on how we can improve. Blair Kellison CEO

Photo courtesy: ?2014 Julie Hughes

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A letter from our Co-founder, Drake Sadler Nearly four decades ago when we began blending teas in a small herb shop in Northern California, the young idealistic hippie co-founders shared the common belief that through their work together they could change the world. Certainly a lot of change has occurred, and we have matured into a large successful business. One thing however has not changed, and that is the mission of the company. It may appear that we are in the herb business, but really we are in the business of change. We are changing the standards of quality for herbal products, changing the practice of alternative medicine, changing the health of the people who consume our products and changing the lives of the rural native people who farm and collect our herbs in the wild. Many medicinal plant species are collected in the wild mainly by local and indigenous people that are sometimes impoverished and struggle to preserve their culture and communities. We work closely with organizations like Fair Trade USA and Fair Wild Foundation--organizations that assist communities in economic development and social empowerment, investing in change from poverty to prosperity. With the support of our health conscious consumers, we believe we share an opportunity to end poverty, end hunger, rebuild families, restore self-sufficiency and economic stability in these rural and indigenous communities. We stand on the threshold of something new, something important, and something we can pass on to our children and the next generation. To expand upon this common purpose we must recognize and encourage spirit leadership within business, in our own communities, and in our families. Thank you so very much for your support of Traditional Medicinals. Drake Sadler

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Our Approach to Public Reporting

Traditional Medicinals is committed to annual public reporting of its sustainability and social responsibility performance. Sustainability is built on three interrelated pillars: environmental protection, social equity and economic viability. Performance indicators for measuring sustainability in our operation and value chains therefore involve economic, environmental and social criteria.

Traditional Medicinals integrates the implementation of sustainability standards within its overall quality assurance system in light of mission-driven priorities for sourcing the highest quality ingredients while promoting social justice and environmental activism.

Our emphasis on the value of independent third-party auditing and certification of sustainability practices (organic and fair) in our supply chain requires transparency from the field level to our production facility in Sebastopol, California. An organic and fair certified botanical supply chain is integrally linked to the company's overall sustainability performance.

Our approach to public reporting is informed by the company's voluntary participation in a number of initiatives that require periodic reporting using various assessment tools. This includes requirements of being a California Benefit Corporation, Certified B Corporation, California Certified Green Business, Green America? Certified Green Business, EPA Green Power Partner and as a member of the Sustainable Food Trade Association (SFTA).

We had initially chosen the SFTA report format because its reporting categories (focused on organic food supply chain and production) overlap with the scope of our function as a manufacturer of sustainable (organic + fair) herbal products. Our first annual report (FY2012) closely followed the SFTA framework. Our second annual report (FY2013) was expanded to include additional information gleaned from our experience with the Certified B Corporation and California Green Business assessment processes. While this third annual report (FY2014) continues to follow the SFTA format it is expanded by the inclusion of information that is required for California Benefit Corporation public reporting. Our aim is to produce one annual report that satisfies the reporting requirements for each of the voluntary initiatives, while communicating our efforts and performance toward our sustainability mission.

In its website, Traditional Medicinals published highlights from the FY2012 and FY2013 annual reports and aims to publish this FY2014 report publicly before end of FY2015. Prior to public reporting, all shareholders received a copy of this report. Our publicly reported highlights for FY2012 and FY2013 included:

Biodiversity Conservation Sustainable Botanical Supply Chain (Organic + Fair) Sustainable and Responsible Packaging Non-GMO Verification Renewable Energy Community Engagement

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